Arbitral Award & Setting Aside — Sections 31 & 34
Landmark Cases:
- Renusagar Power Co. v. General Electric Co. (1994) AIR SC 860 — “Public policy” defined narrowly.
- ONGC v. Saw Pipes (2003) 5 SCC 705 — Added “patent illegality” as a ground.
- Associate Builders v. DDA (2015) 3 SCC 49 — Refined public policy grounds.
The Arbitral Award — Section 31
Section 31, Arbitration and Conciliation Act, 1996: (1) An arbitral award shall be in writing and signed by the members of the arbitral tribunal. (2) For a multi-member tribunal, signatures of the majority are sufficient; reasons for missing signature must be stated. (3) The award shall state reasons, unless parties agreed otherwise or it is an award on agreed terms (Section 30). (4) The award shall state its date and the place of arbitration.
Kinds of Arbitral Awards
| Kind | Description |
|---|---|
| Interim Award (Section 31(6)) | On a specific issue; arbitration continues for remaining issues |
| Final Award | Decides all issues; terminates the arbitration |
| Award on Agreed Terms (Section 30) | Parties settle during proceedings; tribunal records settlement as award |
| Domestic Award | Award from arbitration seated in India |
| Foreign Award (Part II) | Award under New York / Geneva Convention |
Effect — Sections 35 & 36
- Section 35: Award is final and binding on the parties.
- Section 36: Enforced as a decree of a civil court.
Setting Aside an Award — Section 34
The court can set aside an award only on the following grounds:
Party-Based Grounds (Section 34(2)(a))
- Party was under some incapacity.
- The arbitration agreement is not valid under the applicable law.
- Party was not given proper notice of the arbitrator’s appointment or proceedings.
- Award deals with a dispute not contemplated by or not falling within the terms of submission.
- Composition of the tribunal or procedure was not as agreed by parties.
Court-Raised Grounds (Section 34(2)(b))
- The subject matter is not arbitrable under Indian law.
- The award is in conflict with the public policy of India.
Public Policy — What It Means (Post-2015 Amendment)
- Fraud or corruption in the making of the award.
- Contravention of fundamental policy of Indian law.
- Conflict with the most basic notions of morality or justice.
- Not mere legal errors or re-appreciation of evidence.
Time-Limit — Section 34(3)
- Application must be filed within 3 months of receipt of the award.
- Can be extended by 30 days on showing sufficient cause.
- No further extension beyond 30 days.
Setting Aside vs Appeal
| Point | Setting Aside (Sec 34) | Appeal (Sec 37) |
|---|---|---|
| Forum | Court (HC/District Court) | Appellate Court |
| Grounds | Specific (Sec 34(2)) | Only against Sec 34 orders |
| Merits review | No | No |
| Time-limit | 3 months + 30 days | 90 days |
Frequently Tested Exam Problems
| Fact | Answer |
|---|---|
| Tribunal decides something not referred | Ground (4) — Sec 34(2)(a)(iv) — set aside |
| Tribunal denies equal opportunity | Ground (3) — improper procedure — set aside |
| Arbitrator had undisclosed conflict | Challenge under Sec 12; set aside under Sec 34(2)(a)(v) |
| Award is “wrong” on the merits | Cannot be set aside — no merits review under Sec 34 |
| Criminal matter sent to arbitration | Non-arbitrable — set aside under Sec 34(2)(b)(i) |
Info
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